Rajalakshmi Sivam | Updated on May 21, 2011 Published on May 21, 2011


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Strong earnings growth coupled with re-rating in valuations helped the stock of V-Guard Industries, a player in the consumer electrical appliances market, make a return of 94 per cent in the last one year. The re-rating of valuation followed not just the ‘consumer' tag on the stock but also the company's improved performance. V-Guard reported a sales growth of 60 per cent in 2010-11 while net profit jumped 67 per cent.

The robust demand for consumer small-ticket products has been favouring sales growth for V-Guard. The company's product basket has water heaters, fans and low tension power cables in addition to voltage stabilisers, pumps and motors. The company's strategy to focus on the retail segment of individual houses over the last two years when there was a slowdown in infrastructure and real estate industries has also paid up.

V-Guard has also been expanding its dealer network to get into the tier-II and tier-III towns as also explore some new markets in efforts to garner higher market share. The company's recently commissioned cable plant at Uttaranchal gave it an entry into the northern market.

Though sales outlook continues to remain strong for V-Guard, investors need to be cautious over the stock as a spurt in copper price may flip margin and profits. For 2010-11, the company has, however, managed its costs well and reported expansion of one percentage point in operating margin at 10.6 per cent.

Published on May 21, 2011

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